Should I cash in my 10 year old endowment

mysmeg

Hello folks, anyone any advise on this. I have to get a remortgage in February. My standard life policy with critical illness was originally taken out for the value of £38000. My last annual statement showed a medium return of just £27k, and of course there is no guarantee of that either now.Taking that into account when I remortgaged for a new house four years ago, I did a part & part mortgage - with £30k of the loan being endowment based ( i knew then I would never get £38k)

Im thinkiing maybe I should just cash it in now and take out the £8500 and put it against my new mortgage and perhaps try to shorten the term?

I tried the mis-selling claim, and the financial ombudsman could not assist me as the company i used in 1998 at that time were not regulated by them, so I went down t he Scottish Law Society route, and eventually they said the firm had not mis sold to me.

Do I just cust my losses now? Hope someone can advise me what they would do?

Thanks
M

EdInvestor

Post some info on the policy

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
maturity date
Maturity forecasts

Interest rate payable on mortgage

mysmeg

Thank you. This policy is split - half managed and half with profits. Looking at my last yearly statement, but can'tt seem to find some of these figures you asked for -

Guaranteed sum assured ??? Target amount £37600k
Declared bonuses ???? cannot seem to find this
Surrender value - On the 8th July this year £8056.80 ( including final bonus of £610.80)
Monthly premium £62
maturity date july 2023
Maturity forecasts Low £22600 Medium £28300 High £35300

Interest rate payable on mortgage[4.99% ending soon with nationwide

M

dunstonh

Standard life endowments have a mortgage promise amount (its typically shown as a value range). What is that figure?

EdInvestor

mysmeg wrote: »

Surrender value - On the 8th July this year £8056.80 ( including final bonus of £610.80)

Please update this figure by phone and also the maturity forecasts.

Interest rate payable on mortgage4.99% ending soon with nationwide

What new interest rate do you expect to have to pay, roughly?

mysmeg

My "TOP UP" or promise payment Figure is currently £3164.40 - this figure hasn't changed since 2004.

Im hoping to get a mortgage rate of around 5.8%. I just don't know whether to leave it another two years again, but I said that 2 years previously and the mid-range payment in that time has dropped by £2000.

Many Thanks
M

mic200202

Yours contributions at the moments are buying at a good price since the markets are low.When they recover, you will see the benefits. I would guess you saw the same thing back in the early 2000's when any statements weren't too clever. This would be a bad time to cash in.Dont forget you would need to replace the critical illness and life (which may or may not be easy or costly). The forecasts on these type of policies are notoriously difficult to interpret - the reality is if they base these on todays performance, then how can they be used for a maturity expectation in say 15 years? The truth is they just don't know.If the £62 wasnt causing you any great hurt then you could reduce your mortgage reliance further on the current maturity values, or, simply keep it as a savings plan and go full repayment.The Nationwide does allow overpayments on any of its mortgages so it would be easy to work out how much interest you would save by overpaying and / or using a lump sum if you did decide to cash in. There isnt any definitive way to decide what to do.As long as you have all the options to hand, it may well come down to your gut instincts on what to do.

EdInvestor

mic200202 wrote: »

Dont forget you would need to replace the critical illness and life

True, you really need to get an idea of how much this will cost..With many endowments the replacement of life cover is unnecessary or very cheap, but we need to take the CI cost into account on this one.

mysmeg

I called Standard Life today for an up to date settlement figure and was astonished to find it has dropped since July to £7560. It is actually less that what I have paid into it over 10 years, how is that possible? Is it because my policy is splt 50-50 - ?Is it because of the credit crunch? I need a new mortgage in February, does anyone think this figure will increase by then? I honestly don't know what to do, and feel as though my money would have better stuffed under a mattress for ten years.
Thanks in advance, i really need the advise.
M

mic200202

mysmeg, see my post above - the markets are low so your units in your policy aren't worth as much as before.You will see that when the markets start to recover then the value of this policy will go back up.Your contributions are buying at the moment at a good discount. Example - in 2006 say the price of units was £1 in the fund your policy is invested in.Each month your money buys 62 of these.If the value of these units goes down to £0.50 then your are able to buy 124 units each month. When the price recovers back to £1 per unit you can see you have been able to buy more when the price was low, so you policy is worth more.The unit prices are set by the funds your policy is invested in.You can see the variation in just a few months.This is why it needs careful consideration when thinking about a surrender - also dont forget the surrender figure they have given you is lower because it is based on you coming out early from you investment.The actual value of the plan is based on the unit prices.I would still hold on until you see some market recovery (ie stock market prices generally) - but how long this will take we dont know.

EdInvestor

mysmeg wrote: »

I called Standard Life today for an up to date settlement figure and was astonished to find it has dropped since July to £7560.

Did you update the forecasts as well, if so please post them, can't do a comparison until we have those figs..